Cement Industry World’s Most Polluting
The cement industry is one of the world’s most polluting: it accounts for 5% of man-made carbon-dioxide emissions each year. About 4.3 billion tonnes of cement were consumed in 2014-China alone needed more than half of that.
Cement firms have not attracted the ire of environmental campaigners in the way that oil firms have. For now, few cement companies are setting environmental targets that are tough enough.As is the case for many industries, going green could save firms money.Around a third of cement’s production costs come from energy bills.
Retrofitting old kilns to improve thermal efficiency can lower the industry’s energy needs by two-fifths, according to the Carbon Disclosure Project, a research body.
Another way to go green is to reduce the amount of clinker in cement by using waste substitutes such as fly ash from coal plants or slag from steel blast furnaces, but these are becoming scarcer and more expensive.Capturing carbon and then sequestering it, often underground, is another method for cutting emissions.
Rather than stuffing the CO² spewed out of cement and other plants underground, Blue Planet, a carbon-capture company based in California, creates building materials from it in the form of aggregates.These can be recycled into making new concrete, avoiding the need for more limestone.
As almost all big cement firms also produce building materials such as concrete and asphalt, capturing emissions to create such products is worthwhile.
Blue Planet is providing materials for San Francisco’s new airport and has other projects across North America.The group of cement bosses that environmentalists need to win round is small.The nature of the industry helps explain its propensity for consolidation.The great weight of cement and its ingredients makes the materials tough to transport, creating localised markets.Companies prefer to serve distant markets by buying firms that are already there. Deals have multiplied as firms from the rich world have splurged on those in developing countries, and, occasionally, vice versa.
Slowing growth in China has created a huge, grey supply glut of cement in the country, which is likely to mean more dealmaking.Further consolidation, bringing economies of scale, ought to help the industry to clean up.China is to introduce a national carbon-trading scheme in 2017, and the EU’s own scheme will reduce its emissions cap by 2.2% every year after 2020.
The industry is becoming more vulnerable to emissions-curbing legislation, says Phil Roseberg of Sanford C. Bernstein, a research firm. LafargeHolcim already uses an internal carbon price of $32 per tonne; Heidelberg works with one of $23. In a changing regulatory and political environment, investors may start to see nasty cracks in the business model of any firm still stuck in the industry’s old, polluting ways.
This article is a summary of a more indepth article published in The Economist magazine, dated August 2016.